不待鞭扬蹄自奋--天凉好个哈糗的说

A RAROC

China's banking industry is heading to measuring their performance by using Risk-adjusted Return on Economic Capital (RAROC) or Econmic Value Added. In defining the RAROC, we need to first focus on the word "Return".

"Return" refers to a bank's profit leftover from the revenue after taking away the costs associated with providing the bank services.

In practice, revenue is generally determinable. The costs of banking services, however, can be perceived in different ways. One common way, which we don't agree to, refers only to direct costs. The other view would include both direct and indirect costs. But a more comprehensive view would also have expected losses included, on top of direct and indirect costs.

Therefore, mathmatically,

Risk-adjusted Return=Bank Revenue-(direct costs + indirect costs + expexted losses)

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Will you still be interested in invest(other than trade) in those big banks in China by using the method of RAROC valuing?


B NFP in the US


December Employment Situation data released on last Friday were much stronger than what market had expected. As you may or may not know,these data come from two major surveys, namely the Current Employment Statistics (establishment survey) and the Current Population Survey (household survey).



The establishment survey provides the information on the employment,hours, and earnings of workers on non-farm payrolls. This information is collected from payroll records by the Bureau of Labor Statistics (BLS) in cooperation with state agencies. The sample includes about 160,000 businesses and government agencies covering approximately 400,000 individual worksites. The active sample includes about one-third of all non-farm payroll workers.



The household survey provides the information on the labor force, employment, and unemployment. It is a sample survey of about 60,000 households conducted by the U.S. Census Bureau for BLS.



Last year, I had a chance to chat with a former Economist who ever worked for BLS. She told me that many U.S. economic statistic data were creaated from certain types of sampling surveys. Based on her insights, Employment Data are most accurate compared to many others in terms of errors and standard deviations. This feature, coupled with other facts, may partially explain why this single most important statistic set always catches people's eyeballs in the current financial markets.